Hexagon Composites (Buy, TP: NOK28.00) - Continued margin pressure
We continue to see high inflation and industry-wide supply-chain disruptions dampening margins. Although the company has taken several measures to counter this (including cost-saving initiatives and passing on cost increases to clients), we see greater margin uncertainty ahead, leading us to lower our 2023e EBITDA by 15%. Still, the stock is trading at a steep discount to peers, and we see strong repricing potential. We reiterate our BUY, but have lowered our target price to NOK28 (29).Hexagon Composites is divided into three business segments. Co.'s Hexagon Ragasco segment manufactures low-pressue composite cylinders, such as cylinders for propane gas; and Co.'s Hexagon Lincoln/Hexagon Raufoss segment develops and supplies complete storage and transport systems for natural gas and hydrogen to the bus and automotive industry and for bulk transport of compressed gas. The Group's activities are divided into the following regions: Europe, North America, South-East Asia, Middle East and South America.
DNB Markets is the investment banking arm of DNB Bank ASA and is focused primarily on the Nordic region, as well as internationally on niches such as global shipping, energy and related services, and seafood. DNB Markets offers services in FICC, Equities and Investment Banking advisory from offices in Oslo, Stockholm, London, Singapore and New York. Equity research coverage is offered on c250 Nordic companies. DNB was ranked no.2 in Extel Nordic Research 2017. The DNB Markets’ Credit and FICC Macro & FX Research teams are repeatedly highly rated by Prospera Nordic Institutional Investor Surveys.
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